Transaction network launched to Australian managed funds market
Participants in the Australian managed funds market can now sign up to independent transaction network Calastone, which allows buyers and sellers of managed funds to electronically communicate orders.
Calastone has been operating in the UK and Europe since 2008, and has spread its operation to Australia at the behest of global clients such as RBC Dexia, Aberdeen, Schroders, BNP Paribas and Blackrock, according to company joint founder Kevin Lee.
Because different companies use different formats for orders that often don't communicate with each other, many orders end up being completed via fax, which can take several days, but Calastone is able to convert the order into the format preferred by the fund provider that is receiving the order, which Lee said allows for rapid and transparent processing.
The service reduces costs and risk for platform providers, asset managers and custodians, he said.
The biggest hurdle in entering the Australian market was gaining the trust of the major platform providers such as BT, Macquarie Bank and IOOF, given Calastone was previously unknown, Lee said. But following that, he now anticipated a rapid rollout process, because users did not need to change anything about their business processes or install new software.
The original pilot group who were trialling the software here are now encouraging their peers to connect, and the phase two clients are now lined up to connect, he said. The average time to connect is between one and eight weeks, depending on how complex the client is, he said.
"There's no reason to object to it - there's no connection fee, no licence fees," he said. This also makes it appealing to the niche and boutique type players, he added.
Calastone operates in the primary managed funds market rather than the secondary market, meaning units can only be bought and sold through the issuer. As a market utility, it is not a competitor to the likes of the Australian Securities Exchange or AQUA, he said.
The service is offered on a fee for service basis, and there are no commissions or asset related fees. Lee said the philosophy is whoever benefits from the service pays - so if you're an order sender sending orders in to an asset manager, then the service is free of charge. Calastone employs various volume-related charging matrices to determine the cost, he said.
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